Announcements of the “reform” of university funding and public sector pensions and abolition of government quangos have been made in the run-up to the Conservative/Liberal Democrat government’s October 20 Comprehensive Spending Review.

The government intends to set out spending cuts of 25 percent and more across most departments. The announcements it has made are attempts to prepare the ground beforehand and take the sting out of the full package when it becomes known Wednesday.

Last Thursday, what was described as the “largest shake-up” of the civil service in a generation was announced. Some 192 quangos—quasi-non-governmental organisations financed by the state and linked to the civil service—are to be scrapped, and 118 others merged. Tens of thousands of job losses are expected. The Independent reported, “Within minutes of the cuts being announced by the Cabinet Office Minister Francis Maude, its website had crashed under the scale of hits from worried civil servants”.

Precise details of the changes and their impact are still sketchy. Forty bodies are to be axed outright, including the Audit Commission, the Youth Justice Board, the Human Fertilisation and Embryology Authority, the Human Genetics Commission and the Human Tissue Authority. A further 150 will have at least some of their functions transferred to Whitehall. The Office of Fair Trading and the Competition Commission are amongst those to be merged, while several bodies, including British Waterways, will be turned into charities.

The measures have been criticised by Labour and sections of the media, however, on the grounds that the cuts are not “cost-effective”, not least in terms of the severance pay involved. Such complaints deliberately evade the real purpose of the civil service “reform”. It sets a benchmark for the scorched-earth policy of austerity measures that are expected to result in up to 600,000 job losses in the public sector alone.

Earlier in the week, the commission into university funding chaired by Lord Browne reported. The report will not only mean students having to pay significantly increased tuition fees and higher interest rates on any loans they borrow, but the scrapping of courses considered economically unviable and the bankrupting of entire institutions.

The move was proclaimed as the answer to a growing funding gap, but within days it was revealed that universities in England face funding cuts of £4.2 billion in the coming Spending Review. The head of Universities UK, Professor Steve Smith, wrote an email to vice-chancellors saying that the money from increased fees will not provide extra money for universities, but enable a £3.2 billion, or 79 percent cut from teaching and £1 billion from research. A £4.2 billion cut is close to four times the previously anticipated cut. The government currently provides universities with £11 billion in annual grants.

Smith’s email states, “Browne explicitly says that Hefce (England’s university funding body) will have teaching funding of £700 million; the current sum is £3.9 billion”.

While new leader Ed Miliband spoke vaguely about opposing higher fees, the Labour Party is playing a critical role in facilitating the coalition’s cuts package. John Hutton, formerly Labour’s work and pensions secretary, heads the government’s “review” into public sector pension schemes. He is one of a number of leading Labour Party personnel and supporters drafted in by the coalition to oversee its assault on public spending.

In his interim report, Hutton branded public sector pension schemes “unfair and unsustainable”, called for employees to pay higher contributions, for a rise in the retirement age and for the abolition of final salary schemes. The Labour government “did not go far enough”, in reforming public sector pensions, he complained. His review was not about getting working people to contribute to “to fiscal retrenchment or paying off [government] debt”, Hutton claimed, nor about creating a “race for the bottom” in pensions.

Such remarks are flatly contradicted by the results of Hutton’s review, which highlighted the extent to which pensions have been greatly eroded. Public sector employees receive an average pension of just £7,800 a year. When the small percentage of higher earners is removed from the equation, however, the average civil service pension is just £4,200 a year.

As Hutton acknowledged, public sector pensions have been reduced by 25 percent. This was the result of changes to pension schemes agreed by the Labour government and the trade unions, the raising of the retirement age to 65 for new entrants and the coalition’s decision to index pensions to the Consumer Price Index.

Hutton’s interim report makes clear pensions are to be reduced still further. Moreover, his demand that workers make higher contributions to fund their ever diminishing retirement fund amounts to a de facto pay cut, under conditions in which the public sector is already subject to a two-year wage freeze.

Writing in the Financial Times, Nicholas Timmins described the interim report as “a thoughtful and substantial approach to one of the thorniest issues facing the government”. Acknowledging that increased contributions amounted to a pay cut, Timmins said, “It is still the right answer, though it may require staging to make it more palatable”.

The Guardian also welcomed the proposals as “necessary. We are living too long and saving too little for the existing public sector schemes to remain viable”, it claimed. Consequently, “The retirement age will have to rise, and keep rising, in line with life expectancy.… Contributions will also need to go up”. Even this would not solve the problem, it continued.

The major concern of all commentators was how to impose such changes, under conditions in which the scope of the government’s austerity measures will cause widespread anger.

Hutton’s interim report was delivered as millions took to the streets in France against a similar assault on pension provision by President Nicholas Sarkozy. Across Europe, governments are utilising the recession to radically restructure wages and social provision at workers’ expense.

Bob Crow, leader of Rail Maritime and Transport union, threatened “French-style protests” in the UK should Hutton’s recommendations go through. In truth, the mass protests in France are taking place despite the intentions of the trade unions and the Socialist Party, which are working to politically limit opposition to the austerity measures.

Crow’s rhetoric notwithstanding, the trade unions are collaborating with the government to achieve its ends. Trades Union Congress General Secretary Brendan Barber requested talks with the government as to the details of its pension proposals, while Miliband attacked any talk of strike action as counterproductive.

The unions for the most part are agreed that pensions must be made “sustainable”. Miliband would only state that “some” of the government’s cuts should be opposed, on the grounds that they are “irresponsible”.

Behind the scenes, five of the six civil service unions have agreed a revised redundancy package with the coalition that caps severance at one month’s pay for every year worked up to a maximum of 12 months. “Voluntary” redundancies are to be capped to 21 months. With the aid of the trade unions, the coalition is working to redress the “cost-effectiveness” of its cuts by making it easier, and cheaper, to implement mass layoffs.

The economic crisis is the disaster the Conservatives have been praying for. Now they can reshape the economy on corporate lines.

We’ve been staring at the wrong list. In an effort to guess what will hit us tomorrow, we’ve been trying to understand the first phase of the British government’s assault on the public sector: its bonfire of the quangos. Almost all the public bodies charged with protecting the environment, animal welfare and consumers have been either hobbled or killed(1). But that’s only half the story. Look again, and this time make a list of the quangos which survived.

If the government’s aim had been to destroy useless or damaging public bodies, it would have started with the Commonwealth Development Corporation. It was set up to relieve poverty in developing countries, but when New Labour tried, and failed, to privatise it, the CDC completely changed its mission. Now it sluices money into lucrative corporate ventures, while massively enriching its own directors. Private Eye discovered that in 2007 this quango paid its chief executive just over a million pounds(2). The magazine has also shown how the CDC has become entangled in a series of corruption cases(3). Uncut. Unreformed.

The same goes for the Export Credit Guarantee Department. The ECGD effectively subsidises private corporations, by underwriting the investments they make abroad. At one point, 42% of its budget was spent on propping up BAE’s weapons sales(4). It also pours money into drilling for oil in fragile environments(5,6). A recent court case showed how it has underwritten contracts obtained with the help of bribery(7,8). Uncut. Unreformed.

The Sea Fish Industry Authority exists “to help improve profitability for the seafood industry”(9). Though it is a public body, all but one of its 11 directors work for either the fishing industry or food companies(10). They seek to “promote the consumption of seafood”(11), to “champion the industry in public debates”(12) and to “influence the regulatory process” in the industry’s favour(13). Uncut. Unreformed.

Can you see the pattern yet? Public bodies whose purpose is to hold corporations to account are being swept away. Public bodies whose purpose is to help boost corporate profits, regardless of the consequences for people and the environment, have sailed through unharmed. What the two lists suggest is that the economic crisis is the disaster the Conservatives have been praying for. The government’s programme of cuts looks like a classic example of disaster capitalism: using a crisis to re-shape the economy in the interests of business.

In her book The Shock Doctrine, Naomi Klein shows how disaster capitalism was conceived by the extreme neoliberals at the University of Chicago(14). These people believed that the public sphere should be eliminated, that business should be free to do as it wants, and almost all tax and social spending should be stopped. They believed that total personal freedom in a completely free market produces a perfect economy and perfect relationships. It was a utopian system as fanatical as any developed by a religious cult. And it was profoundly unpopular. For a long time its only supporters were the heads of multinational corporations and a few wackos in the US government.

In a democracy under normal conditions, those who were harmed by abandoning public provision would outvote those who gained from it. So the Chicago programme couldn’t be imposed in these circumstances. As the Chicago School’s guru, Milton Friedman, explained, “only a crisis – actual or perceived – produces real change.”(15) After a crisis has struck, he added later, “a new administration has some six to nine months in which to achieve major changes; if it does not act decisively during that period, it will not have another such opportunity.”(16)

The first such opportunity was provided by General Pinochet’s coup in Chile. The coup was plotted by two factions: the generals and a group of economists trained at the University of Chicago and funded by the CIA. Their ideas had already been comprehensively rejected by the electorate, but now the electorate was irrelevant: Pinochet used the crisis he had created to imprison, torture or kill anyone who dissented. The Chicago School policies – privatisation, deregulation, massive tax and spending cuts – were catastrophic. Inflation rose to 375% in 1974; the highest rate on earth. Even so, Friedman insisted that the programme was not going far or fast enough. On a visit to Chile in 1975 he persuaded Pinochet to hit much harder. The result was a massive increase in unemployment and the near-eradication of the middle class. But the very rich became much richer, and the corporations, scarcely taxed, deregulated, fattened on privatised assets, became much more powerful.

By 1982, Friedman’s prescriptions had caused a spectacular economic crash. Unemployment hit 30%; debt exploded. Pinochet sacked the Chicago economists and started re-nationalising stricken companies, whereupon the economy began to recover. Chile’s so-called economic miracle began only after Friedman’s doctrines were abandoned. The Chicago School’s catastrophic programme pushed almost half the popultaion below the poverty line and left Chile with one of the world’s highest rates of inequality(17).

But all this was spun by the corporate media as a great success. With the help of successive US governments, similar programmes were imposed on dozens of countries in which crises ensured that the population was unable to resist. Other Latin American dictators copied Pinochet’s economic policies, with the help of mass disappearances, torture and killings. The poor world’s debt crisis was used by the IMF and the World Bank to impose Chicago School programmes on countries that had no option but to accept their help. The US hit Iraq with economic shock and awe – privatisation, a flat tax, massive deregulation – even as the bombs were still falling. After Hurricane Katrina wrecked New Orleans, Friedman described it as “an opportunity to radically reform the educational system”(18). His disciples immediately moved in, sweeping away public schools while the residents were picking up the pieces of their lives, replacing them with private charter schools.

Our crisis is less extreme, so, in the United Kingdom, the shock doctrine cannot be so widely applied. But, as David Blanchflower warned yesterday, there’s a strong possibility that the cuts programme will precipitate a bigger crisis: “it’s a terrible, terrible mistake. The sensible thing to do is to spread [the cuts] over a long time”(19). That’s another feature of disaster capitalism: it exacerbates the crises on which it thrives, creating its own opportunities.

So we shouldn’t wonder that 35 corporate executives wrote to the Telegraph yesterday, arguing, just as Milton Friedman used to do, for a short, sharp shock, before the window of opportunity closes(20). The policy might hit their profits for a while, but when we stagger out of our shelters to assess the damage, we’ll discover that we have emerged into a different world, run for their benefit, not ours.